Trouble With Teens Could Trip Up Today’s Facebook Earnings

0

When Facebook mentioned “a decrease in daily users specifically among younger teens” in last quarter’s earnings call, its share price fell from $57.98 in after-hours trading to open the next day at $47.16, eliminating tens of billions of dollars in value accrued from strong financials. How will investors react if today’s Q4 2013 earnings see Facebook admit a more serious decline amongst youngsters?

It’s a grim question considering that despite security breaches, Snapchat seems to still be growing strong with teens. Meanwhile, international messaging apps popular with kids appear to have maintained their momentum. It’s critical to understand that these competitors aren’t going to replace Facebook. They’re discrete apps that perform a very specific messaging function. Facebook is a full-fledged social network and identity provider. The threat isn’t Snapchat or WhatsApp destroying Facebook the way Facebook destroyed Myspace, it’s them stealing monetizable time away from Mark Zuckerberg’s creation.

Still, Facebook may need a lot of other bright spots in today’s earnings to outshine issues with teens, who are seen as social network trendsetters.

One milestone its likely to benefit from is that Facebook is almost sure to cross the 50% mark in terms of percentage of ad revenue coming from mobile. It hit 49% in Q3, up from 41% in Q2, so we might see it reach around 53% today. Wall Street expects revenue of $2.35 billion and $0.27 EPS but Facebook may need more to impress investors. Shares opened at $54.61 today, well over double its 52 week low of $22.67 and May 2012 IPO price of $38, but down a bit from a high of $59.31 earlier this month.

Facebook also may be reaching saturation in its top markets like the US and UK, and slow growth or declining total user counts there could spook the street.

The financial spotlight will be on the success or failure of Facebook’s newest ad products: Instagram ads and Facebook auto-play video ads.

Facebook described the early results of Instagram ads that began appearing November 1st as “promising” in December, yet there’s still worry that backlash about marketers invading Instagram could turn off users.

Product-wise, Facebook’s been in a bit of slump lately. Instagram Direct, its new private photo messaging feature, hasn’t seemed to be gaining significant traction. Even though my friends are active Instagrammers, I haven’t recieved a Direct message in over a month, and other TechCrunch writers haven’t either. My early prediction that Direct may fail because its wall-based group chat is too different from traditional messaging but not unique enough to capture attention is seeming more accurate.

Facebook never rolled out the News Feed redesign it announced last year, and Graph Search remains stuck on the web after a year despite claims it would go mobile in 2013.

The social network continues to fiddle with its feed algorithm in hopes of making it more informative and sticky, though it’s walking on egg shells trying to avoid pissing off Page owners by decreasing their organic reach. Facebook’s also taken to emulating Twitter.Trending topics, hashtags and more have earned it some jabs for not innovating, though Facebook’s take on Trending is more about providing descriptive, high-level takes on the day’s biggest headlines than following up-to-the-minute public reactions like on Twitter.

But if last quarter’s earnings call was any indications, just one word could make or break Facebook’s share price today: teens. The problem is that Facebook has a lot more to lose than to gain here. Even if it can reassure investors that kids aren’t leaving Facebook despite it not being “cool” any more, investors may simply reply “yet?” Whereas a full confession that teens are drifting away could trigger an investor panic about an incoming Facepocalypse.

For more news and up-to-the-minute coverage of Facebook’s earnings, click below:

0

Crunchbase

OverviewFacebook is an online social networking service that allows its users to connect with friends and family as well as make new connections. It provides its users with the ability to create a profile, update information, add images, send friend requests, and accept requests from other users. Its features include status update, photo tagging and sharing, and more.
Facebook’s profile structure includes …

OverviewSnap, formerly Snapchat Inc, is a privately owned multinational camera company.
Snap is behind Snapchat, a photo messaging app that allows users to take photos, record videos, add text and drawings, and send them to recipients. In 2016, it released Spectacles, video-sharing sunglasses that free the Snapchat app from smartphone cameras.